Increasing concentration in the food industry and accusations of price fixing

Kraft foods recently agreed a merger with Heinz in a move that would create the world’s fifth largest food company.US food giant.

Meanwhile Kraft is being accused of manipulating the price of wheat by a US government agency, who said that Kraft’s  huge purchase of wheat on the futures market raised the price of the commodity and earned them a profit of $5.4m as they sold it off.

The price-fixing methods are too complex for us to understand, but it is an example of how a more monopolistic market can lead to practices that are not in the interests of consumers or the wider economy. Government regulations are then probably necessary to correct the market failure.

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